Vulcan Mateials reported Q4 results yesterday that beat forecasts both on a revenue and earnings per share basis driven by strong volume and pricing increases across sun belt states. Revenue for the quarter amounted to $680.2 million (est. $654.0 million) while earnings per share came in at 8c (est. -3c). The beat in profit metrics was driven by excellent aggregates volume growth of 7% in Q4 and pricing also increased by 3.5%. This compares to Martin Marietta that suffered from a volume decline of .4% in Q4 while prices moved higher by 3.4% for the company over the same period. <p>
The strong divergence in aggregates volume trends can be explained in the geographic exposure of Vulcan Materials and the focus of the group towards sun belt states that are also experiencing a resurgence in residential construction activity. Management at the company note that they experienced double-digit volume growth in markets such as Arizona, California (c. 21% of revenue), Florida (c.9% of revenue), Georgia(c. 7% of revenue), North Carolina and Texas (c.9% of revenue). Prices also increased during the quarter led by states such as Alabama, California, Florida and Texas. Given the importance of California to the company and the strong volume and price trends experienced in the country, it likely featured as a significant boost to the company. Martin Marietta is more focused towards the Eastern seaboard with large exposure to North Carolina, Georgia, Iowa, South Carolina and Texas being their largest market. <p>
CRH will likely experience US aggregates performance in Q4 closer to Marin Marietta (volumes -.4%), Cemex (volumes +1%) and HeidelbergCement (volumes -3.5%) when the group reports results later this month. <p.
In terms of outlook, Vulcan Materials is guiding for aggregates demand to increase in 2014 across all business lines including residential, non-residential and infrastructure end markets. Management are guiding fro volumes to increase by 4-7% in 2014, with prices moving higher by 3-5%. While Vulcan Materials has proven to be too ambitious in prior years with their early full year guidance, the company’s exposure to sun belt states will likely see its outperformance versus its peers occur in 2014 once again. <p>
In response to the earnings beat, Vulcan Materials shares traded higher by 9% in trading yesterday in New York.
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